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Citigroup, RBC raise Apple estimates ahead of earnings call

post #1 of 28
Thread Starter 
Investment banks Citigroup and RBC Capital Markets have both raised their outlook for Apple's second fiscal quarter, saying they expect the company to announce Wednesday revenues of more than $7 billion on sales of over 2 million Mac systems.

Citigroup

In a report to clients Monday, Citigroup analyst Rich Gardner raised his estimates for the three-month period ending March to per-share earnings of $1.23 on sales of $7 billion, up from $1.14 and $6.9 billion.

More importantly, however, the analyst said he's looking for the Cupertino-based company to report near record gross margin of 36.5 percent, driven largely by sharp reductions in the cost of solid-state memory components such as DRAM and NAND flash.

Gardner is modeling for 38 percent yearly Mac growth to 2.1 million systems, up from his previous estimate of 2.0 million, driven by upside from better than expected sales of Mac Pros and the new MacBook Air sub-notebook.

iPhone sales should come in at roughly 1.5 million units for the quarter, of which grey market sales will be a large contributor, he said. Meanwhile, the analyst is expecting iPod units to come in at 9.5 million, down from his previous estimate of an even 10 million units.

"iPod should struggle until the line is refreshed in [the third calendar quarter]," he wrote.

Gardner reiterated his Buy rating on Apple shares, which remains Citigroup's "Top 2008 Pick" with a 12-month price target of $212 per share.

RBC Capital Markets

Separately on Monday, RBC Capital Markets analyst Mike Abramsky also issued upbeat pre-earnings report on Apple, saying he expects the company to report earnings of $1.11 per share on sales of $7.2 billion.

The analyst's checks and proprietary data have him modeling for 46 percent Mac growth to 2.2 million systems, a 5 percent decline in iPods to 10 million units, and iPhone sales of 1.8 million units.

More specifically, Abramsky said he expects the Mac maker to report sales of 1.3 million notebook systems, including 150,000 MacBook Airs. Meanwhile, iTunes revenue is estimated to rise 19 percent to $777 million, and Apple TV shipments are expected to have more than doubled during the quarter to approximately 200,000 units.

"Although economic slowdown remains a risk, Apples fundamentals remain healthy, and earnings power and cash flow remains strong," Abramsky wrote.

The analyst maintained his Outperform rating but raised his price target on the company's shares to $190 from $175.
post #2 of 28
Looking good.
post #3 of 28
However, that recalcitrant Windows fanboy Rob Enderle is once again predicting the demise of Apple in his screed today. He has all sorts of "secret" knowledge that products vastly superior to Apple's offerings are on the verge of being released. Seems these products were developed specifically as Apple killers after the manufacturers finally realized that Apple does a lot of stuff right so it might time to copy those ideas once again.

http://www.technewsworld.com/story/T...ple-62661.html
post #4 of 28
Quote:
Originally Posted by lkrupp View Post

However, that recalcitrant Windows fanboy Rob Enderle is once again predicting the demise of Apple in his screed today. He has all sorts of "secret" knowledge that products vastly superior to Apple's offerings are on the verge of being released. Seems these products were developed specifically as Apple killers after the manufacturers finally realized that Apple does a lot of stuff right so it might time to copy those ideas once again.

http://www.technewsworld.com/story/T...ple-62661.html

"I've seen some of the coming products that potentially will out-Apple Apple"
read: Someone else's future products will be better than Apple's current products.

Why not become innovative to beat Apple's future products rather than letting Apple lead the way?
post #5 of 28
Quote:
Originally Posted by Chris_CA View Post

"I've seen some of the coming products that potentially will out-Apple Apple"
read: Someone else's future products will be better than Apple's current products.

Why not become innovative to beat Apple's future products rather than letting Apple lead the way?

I would be in agreement if it weren't for the fact that we've read all this before over the years and those products never seem to quite make it to Apple killing status. By the time these secret products reach the market Apple will have already moved on to the next great innovation or market changing development. Apple always seems to be able to stay one step ahead of the competition. If you define success by market share then Apple is irrelevant but, as we all know, Apple is very relevant to several markets now and is the acknowledged innovator to be targeted and/or copied.
post #6 of 28
If these guys are in the ballpark, wouldn't that put iPhone sales so far at between 5.5 million and 5.8 million units worldwide?

That is impressive for a product that is expensive, available in only four countries, tied to expensive plans with sole carriers, and would have been available for less than 10 months!
post #7 of 28
Quote:
Originally Posted by lkrupp View Post

However, that recalcitrant Windows fanboy Rob Enderle is once again predicting the demise of Apple in his screed today. He has all sorts of "secret" knowledge that products vastly superior to Apple's offerings are on the verge of being released. Seems these products were developed specifically as Apple killers after the manufacturers finally realized that Apple does a lot of stuff right so it might time to copy those ideas once again.

http://www.technewsworld.com/story/T...ple-62661.html

The story is headlined "The Secret Global War to Beat Apple."

This is just too sad.

If there is a smattering of truth to this guy's "secret" knowledge, then all I can say is: for all the tens of billions of dollars being spent by the tens of thousands of bright minds in consumer tech, their collective ability to push the envelope through innovation (in the product segments where Apple competes) is beyond pathetic.
post #8 of 28
Quote:
Originally Posted by anantksundaram View Post

If these guys are in the ballpark, wouldn't that put iPhone sales so far at between 5.5 million and 5.8 million units worldwide?

That is impressive for a product that is expensive, available in only four countries, tied to expensive plans with sole carriers, and would have been available for less than 10 months!

That won't stop some people around here from declaring it a failure.
post #9 of 28
Quote:
Originally Posted by anantksundaram View Post

The story is headlined "The Secret Global War to Beat Apple."

This is just too sad.

If there is a smattering of truth to this guy's "secret" knowledge, then all I can say is: for all the tens of billions of dollars being spent by the tens of thousands of bright minds in consumer tech, their collective ability to push the envelope through innovation (in the product segments where Apple competes) is beyond pathetic.

I have to give him some credit. He does knock Windows something terrible, and he has often praised Apple highly.

But, he had also said that he saw new case designs from Apple when they were about to move to Intel that would bowl everyone over, as well as change the way the industry thinks about design, and we know what happened there.
post #10 of 28
As Han Solo said to Luke Skywalker after he shot down a Tie Fighter, "Don't get cocky." I'm definitely hoping Apple has all the right numbers and announces some decent guidance, but my memory of losing so much value on my Apple stock still looms in my mind.

Talking big is alright, but Apple has to deliver and WS musn't have any outrageous "whisper" numbers. Some people are saying that our earnings pop is already built in to the stock rise over the last week or two. Dammit, that doesn't sound great at all. Others are saying that this quarter is a "sure thing" and Apple "can't lose". Warren Buffet isn't recommending Apple and Apple ain't Berkshire Hathaway, so volatile Apple is not a "sure thing" this quarter.

I'm hoping Apple doesn't drop and stays at around $165 until the 3G iPhone is introduced (in Italy??), then slowly climb up to $190 as iPhone sales start to soar and if we're lucky, we'll be sitting at $210 by the end of the year. That's conservative and good enough for me. Heck, I thought we'd be at $210 by past February 2008. Nothing is a sure thing, especially Apple.
post #11 of 28
Quote:
Originally Posted by Constable Odo View Post

As Han Solo said to Luke Skywalker after he shot down a Tie Fighter, "Don't get cocky." I'm definitely hoping Apple has all the right numbers and announces some decent guidance, but my memory of losing so much value on my Apple stock still looms in my mind.

Talking big is alright, but Apple has to deliver and WS musn't have any outrageous "whisper" numbers. Some people are saying that our earnings pop is already built in to the stock rise over the last week or two. Dammit, that doesn't sound great at all. Others are saying that this quarter is a "sure thing" and Apple "can't lose". Warren Buffet isn't recommending Apple and Apple ain't Berkshire Hathaway, so volatile Apple is not a "sure thing" this quarter.

I'm hoping Apple doesn't drop and stays at around $165 until the 3G iPhone is introduced (in Italy??), then slowly climb up to $190 as iPhone sales start to soar and if we're lucky, we'll be sitting at $210 by the end of the year. That's conservative and good enough for me. Heck, I thought we'd be at $210 by past February 2008. Nothing is a sure thing, especially Apple.

1) Whether and how much any of this matters depends on the price at which you bought, and your investment horizon.

2) I am not into giving any investment advice, but if 9 months is your horizon, I doubt that Apple is the stock to own. (Heck, I wonder if stocks are the investment to own).
post #12 of 28
Quote:
Originally Posted by quinney View Post

That won't stop some people around here from declaring it a failure.

You don't know the iphone is already a failure.
post #13 of 28
Quote:
Originally Posted by melgross View Post

I have to give him some credit. He does knock Windows something terrible, and he has often praised Apple highly.

But, he had also said that he saw new case designs from Apple when they were about to move to Intel that would bowl everyone over, as well as change the way the industry thinks about design, and we know what happened there.

I generally agree with you, but this passage rankled (esp. the bolded parts):

"For well over a decade, I've used Apple both as an example of how to do things right and how to do them wrong. For most of this time, it has been more effective as a negative example because the companies I advise viewed Apple as a firm always on the cusp of going out of business .

Over the last year this has changed dramatically, and suddenly Apple is the company that is more of an example of how to do things right than wrong....."


I could easily raise a dozen questions between just these three sentences about bias, framing, incorrect facts, presumptive judgments, false attributions, and bragadoccio. (It would be too boring to list).
post #14 of 28
Quote:
Originally Posted by anantksundaram View Post

I generally agree with you, but this passage rankled (esp. the bolded parts):

"For well over a decade, I've used Apple both as an example of how to do things right and how to do them wrong. For most of this time, it has been more effective as a negative example because the companies I advise viewed Apple as a firm always on the cusp of going out of business .

Over the last year this has changed dramatically, and suddenly Apple is the company that is more of an example of how to do things right than wrong....."


I could easily raise a dozen questions between just these three sentences about bias, framing, incorrect facts, presumptive judgments, false attributions, and bragadoccio. (It would be too boring to list).

Actually, that is an interesting quote. He admits that his advice to people was based on what they thought, not what he thought. And that he was wrong for a decade. I hope those people who he was giving advice to were not paying him!! What use is having a consultant who tells you what you want to hear and is wrong for a decade!

Still, this isn't the anti-Apple screed people were making it sound like. He is giving Apple its props now...
Quote:
It will probably take a year or two for all of this to hit the market, but when it does, the market will be forever changed. Anticipate these coming changes and realize that we'll largely have Apple to thank, both for direction and for being such a great place to incubate people who have now gone and taken what they learned at Apple elsewhere.

...and stating the obvious. Of course every one wants to do what Apple is doing. It is working. It is not anti-Apple, just common sense.
Of course, usually, when companies try to copy Apple, they copy the look. They are going to have to do better than that...
Progress is a comfortable disease
--e.e.c.
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Progress is a comfortable disease
--e.e.c.
Reply
post #15 of 28
Quote:
Originally Posted by lkrupp View Post

I would be in agreement if it weren't for the fact that we've read all this before over the years and those products never seem to quite make it to Apple killing status. By the time these secret products reach the market Apple will have already moved on to the next great innovation or market changing development. Apple always seems to be able to stay one step ahead of the competition. If you define success by market share then Apple is irrelevant but, as we all know, Apple is very relevant to several markets now and is the acknowledged innovator to be targeted and/or copied.

Apple is to Microsoft like Target is to Wal-Mart?

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply
post #16 of 28
Quote:
Originally Posted by Constable Odo View Post

Warren Buffet isn't recommending Apple and Apple ain't Berkshire Hathaway, so volatile Apple is not a "sure thing" this quarter.

I believe the esteemed Buffet avoids tech stocks. He's been known to say he only invests in businesses he understands, and he doesn't understand high-tech.

I'm thinking of putting in a 5 or 10% stop loss on my AAPL in anticipation of a dip. Dip if they miss numbers - oh noes! they're DOOMED!! Dip if they make numbers - oh noes! They only met the numbers!! Dip if they exceed numbers - They're done! They've run out of ideas! They can't keep this up!

- Jasen.
post #17 of 28
Quote:
Originally Posted by lkrupp View Post

However, that recalcitrant Windows fanboy Rob Enderle is once again predicting the demise of Apple in his screed today. He has all sorts of "secret" knowledge that products vastly superior to Apple's offerings are on the verge of being released. Seems these products were developed specifically as Apple killers after the manufacturers finally realized that Apple does a lot of stuff right so it might time to copy those ideas once again.

Never take tech advice from a guy with a mustache.


By the way, AAPL closed over 168 today. I guess those who predicted it would go under 100 are feeling pretty silly now...at least they can comfort themselves with the fact that they didn't have the balls to actually *invest* based on those sure fire predictions.
post #18 of 28
Quote:
Originally Posted by minderbinder View Post

By the way, AAPL closed over 168 today. I guess those who predicted it would go under 100 are feeling pretty silly now...at least they can comfort themselves with the fact that they didn't have the balls to actually *invest* based on those sure fire predictions.

Heh heh.... as I've said elsewhere, who cares whether one loves or hates the iPhone (for the record, I love mine): I certainly can't complain about its effects on my portfolio!
post #19 of 28
Quote:
Originally Posted by anantksundaram View Post

I generally agree with you, but this passage rankled (esp. the bolded parts):

"For well over a decade, I've used Apple both as an example of how to do things right and how to do them wrong. For most of this time, it has been more effective as a negative example because the companies I advise viewed Apple as a firm always on the cusp of going out of business .

Over the last year this has changed dramatically, and suddenly Apple is the company that is more of an example of how to do things right than wrong....."


I could easily raise a dozen questions between just these three sentences about bias, framing, incorrect facts, presumptive judgments, false attributions, and bragadoccio. (It would be too boring to list).

It's interesting. But, for some of that time, Apple WAS on the cusp. So theres no arguing with that.

But remember that he's a pundit. Controversy is where he makes his money.

I don't fault him for that, I just read between the lines.

Over the years I've corresponded with him, and I've found him to be interesting and engaging. He is wrong about as often as he is right, but he does have a platform.

I don't even like to knock Dvorak too much, though I've had my run-ins with him.
post #20 of 28
Quote:
Originally Posted by Bageljoey View Post

Actually, that is an interesting quote. He admits that his advice to people was based on what they thought, not what he thought. And that he was wrong for a decade. I hope those people who he was giving advice to were not paying him!! What use is having a consultant who tells you what you want to hear and is wrong for a decade!

Still, this isn't the anti-Apple screed people were making it sound like. He is giving Apple its props now...

...and stating the obvious. Of course every one wants to do what Apple is doing. It is working. It is not anti-Apple, just common sense.
Of course, usually, when companies try to copy Apple, they copy the look. They are going to have to do better than that...

If you read him all the time, as I do, you would see that he isnt theApple basher, or the Windows shill.

It's when people read that he said something negative, and read that only, does he seem that way.

This isn't MacDailyNews. There, anything, no matter how slight, that knocks anything about Apple at all, is considered to beApple bashing.

I always hope that here, except for a few indviduals, we can see both the good and bad about Apple, and evaluate it fairly.

Enderly may, at times, use colorful words to express his positions, but he's been more than fair.
post #21 of 28
Quote:
Originally Posted by minderbinder View Post

Never take tech advice from a guy with a mustache.


By the way, AAPL closed over 168 today. I guess those who predicted it would go under 100 are feeling pretty silly now...at least they can comfort themselves with the fact that they didn't have the balls to actually *invest* based on those sure fire predictions.

I haven't seen G3man for a while now.
post #22 of 28
Quote:
Originally Posted by melgross View Post

I haven't seen G3man for a while now.

Can you blame him for hiding?
post #23 of 28
Quote:
Originally Posted by minderbinder View Post

Can you blame him for hiding?

No. But it would be nice if he came back like a man, and took his lickin'.
post #24 of 28
Quote:
Originally Posted by jasenj1 View Post

I'm thinking of putting in a 5 or 10% stop loss on my AAPL in anticipation of a dip. Dip if they miss numbers - oh noes! they're DOOMED!! Dip if they make numbers - oh noes! They only met the numbers!! Dip if they exceed numbers - They're done! They've run out of ideas! They can't keep this up!

Ain't that the truth. Hard to make heads or tails out of how the market will react.

Look at last quarter...perhaps jitters due to the sub-prime fiasco, but Apple got hit badly despite good numbers. Thankfully, I didn't jump ship. I only wished I had picked up some more stock when it was back around the $120's.
post #25 of 28
I hate all the raised estimates and 'pumping' of APPL on the talk shows, especially CNBC. Expectations have been raised very high and I suspect that some deep number like the number of pink iPods sold will be the number that moves the stock instead of overall earnings.

Funny, people who thought Apple's last earnings had 'hair' are now back on the bandwagon. Yeah, I'm looking at you Cramer.
post #26 of 28
Don't worry too much about the short term volatility... you know it's going to plummet after the next call. Pick up more then.

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply
post #27 of 28
Quote:
Originally Posted by SpamSandwich View Post

Don't worry too much about the short term volatility... you know it's going to plummet after the next call. Pick up more then.

I try not too, but it's a bit gut wrenching to see APPL shed 80 points. I'm really beginning to think APPL will loose 20 points after they report earnings. Expectations just seem very high right now.
post #28 of 28
Quote:
Originally Posted by backtomac View Post

I try not too, but it's a bit gut wrenching to see APPL shed 80 points. I'm really beginning to think APPL will loose 20 points after they report earnings. Expectations just seem very high right now.

Apple's price dropped more than the markets. This was to be expected because of the kind of products they sell. If they were strong in enterprise and government sales the price wouldn't have dropped as much.

But, that's also the reason why it's moving up faster than the market.

I expect this volatility. That's why I bough twice on the way down. First at 173, and then again at 125.
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